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Is there a minimum amount to invest in the stock market?




That is one of the questions we are asked most often. The good news is that this is a fairly easy question to answer because there is no magic number. In other words, technically speaking at least, there is no minimum amount of money needed to start investing in stocks. Of course you will have some fees to open your account and some fees to trade as well but these fees are most of the time pretty insignificant, so you could start trading stocks with let’s say a mere $200. Many brokerages have no minimum to open an account and get started buying stocks. So you could open an account today with just a couple of bucks. But what would happened if you were to do that? Well, some brokerage charge you fixed fees of $10 a month regardless of your portfolio size and trading activities. If you were to open a stock brokerage account with one these firms and invest only $1,000, you would have to pay 12% of your portfolio in fees over the year. Absolutely madness. Of course, our example covers a specific and extreme case but there are many other cases where you would end up with the same problems. The point is that even though there is no official minimum sum to invest, the reality is that if you have less than $5,000 to $7,000 to invest in stocks, the different costs involved (even without taking into consideration the associated administrative burden) would make your investment not viable.

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